Project Update

Consolidation Reorganization and Targeted Improvements

Last updated on October 5, 2017. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective and Background

The objective of this project is to reorganize the guidance in Topic 810, Consolidation. The Board has learned from stakeholders that Topic 810, as currently organized, is difficult to navigate and is reorganized within practitioner guidance to assist practitioners and preparers in its application. Additionally, some stakeholders indicated that there are certain terms and concepts that are overly complex and could be clarified.

*Due Process Documents

On September 20, 2017, the FASB issued Proposed Accounting Standards Update, Consolidation (Topic 812): Reorganization. The due date for comment letters is December 4, 2017.

Tentative Board Decisions Reached to Date (as of June 21, 2017)

The Board decided to move the guidance for “Consolidation of Entities Controlled by Contract” from Topic 810, Consolidation, to Topic 958, Not-for-Profit Entities.

The Board directed the staff to incorporate language into the reorganization of Topic 810 summarizing the application of expected to assist stakeholders with applying the concept of expected as it relates to the definitions and concepts of variable interest, expected losses, and, expected residual returns.

The Board decided that an entity that has not yet adopted the amendments in Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, would be required to adopt the amendments in the proposed Update at the same time it adopts the amendments in Update 2015-02 and it would apply the same transition method elected for applying Update 2015-02.

The Board decided that an entity that already has adopted the amendments in Update 2015-02 would be required to apply the proposed amendments retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in Update 2015-02 initially were applied.

The Board decided that an entity should provide the transition disclosures required within paragraphs 250-10-50-1 through 50-2 (excluding the disclosure requirements in paragraph 250-10-50-1(b)(2)).

November 2, 2016

The Board decided to add a project to its technical agenda to clarify the guidance in Topic 810, Consolidation, by reorganizing that Topic into a new Topic (Topic 812) superseding Topic 810 in its entirety. The Board also decided that Topic 812 should consist of separate Subtopics for guidance related to VIEs and voting interest entities (VOEs). The Board also decided to clarify that power over a VIE is obtained through a variable interest and to provide additional clarification of the application of the concept of expected, which is used throughout the VIE consolidation guidance.

Additionally, the Board preliminarily decided to supersede the guidance on consolidation of entities controlled by contract currently in Subtopic 810-10 and the entirety of Subtopic 810-30, Consolidation—Research and Development Arrangements, from the proposed reorganization and directed the staff to ask a question in a proposed Accounting Standards Update about whether that guidance is still applied and, if so, to describe in detail the circumstances requiring its application.

Finally, the Board directed the staff to schedule a public roundtable meeting to discuss the potential reorganization of the consolidation guidance, as well as seek feedback on its considerations for how the related party guidance in the VIE model can be simplified.

February 3, 2016

At the February 3, 2016 Board meeting, the Board discussed, but decided not to include the topic of Consolidation in an agenda Discussion Paper. Instead, the Board decided that pre-agenda research should continue.

*Next Steps

The Board will consider feedback received on the Proposed Accounting Standards Update at a future meeting.

Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

June 21, 2017

Board Meeting—The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot.

Board Meeting—The Board added the project to the technical agenda and directed the staff to develop a staff draft of its tentative decision and considerations of simplifying the related party guidance for discussion at a public roundtable.

February 3, 2016

Board Meeting—The Board discussed adding a project on consolidation to the research agenda.